crease and the sum of a running decrease carried along from year to year, and repeated over, and over, and over again.

Q. Reappearing in successive years?-A. Reappearing in successive years, and changing constantly from one side of the account to the other. The proper resulting difference is the difference stated at the end, $94,313,827.07. That is the item to be explained. A difference in an account of $27 in one year, and the same not being corrected repeats itself in the next year, and then a difference in the next year of $3 would make a total difference of $30. Add the two together, and it would be $57, whereas the real difference is $30. That is perfectly evident.

By Mr. BECK:

Q. You made one pretty sweeping statement, if I understood you correctly. Shall I understand you to say that you here testify that from the time you came into the Treasury Department in 1861, till you left it in 1873, there was neither fraud nor anything wrong perpetrated in this department?-A. By no means.

Q. Tell us what you meant to say?-A. I simply said that I never in my experience in this depart.nent, extending from 1861 to 1873, knew the government to lose one cent of money as the result of fraudulent alterations, erasures, changes, or what not, in the accounts or books of the department.

Q. That is a different thing. I was about to call your attention to a very valuable report made March 3, 1869, by Senator Edmunds and Representative Halsey from the joint committee on retrenchment, in which there were plenty of things stated.-A. Mr. Ingalls's question was as to alterations in the books and papers, substitutions, changes, and erasures. It has often been a great marvel to me that things of the kind have not been attempted. The only time I ever knew of an attempt to get money out of the Treasury Department by alterations of warrants or requisitions was in the case of a man named Cooper, who was afterwards sent to the penitentiary for the transaction, and who has recently reappeared in London in a forgery case. He forged the signature of an officer on board a ship to a requisition in favor of Paymaster Pangborn, for $75,000, I think, and that requisition went to the Navy Department, and upon that requisition the Secretary of the Navy issued his requisition on the Treasury Department for the money in the proper form and usual manner, and the whole transaction passed through the Treasury Department, and never would have been discov ered-because strangely, as it happened, Pangborn died very shortly after the transaction-if it had not been for a suspicion of mine that this man Cooper was doing something wrong, and a detective was sent to follow him to Baltimore, who saw him take the draft out of the postoffice there-a draft which was properly issued. The whole transaction was perfectly legitimate and proper, except in its inception, a forgery in its inception, and a forgery of the indorsement on the draft, and a representation at the bank by a man in naval uniform that he was Paymaster Pangborn. That is the only instance I know of in which even a forgery was attempted to obtain moneys out of the Treasury through the warrants.

Q. Your investigations in relation to the true mode of statement, whether from Issues and Redemptions, or Receipts and Expenditures, was substantially limited to the public debt?-A. My personal investigation?

Q. You never went into any detailed examination as to the accuracy with which the general dealings were kept, the dealings with the War

Department, the Navy Department, the Interior Department, or any of those other departments or the expenditures made by them?-A. Never prior to my becoming chief of that office. Subsequently, when I became chief of the Warrant Office, I made it a rule to have every clerk compare his books at the end of every month with every office that kept books that corresponded with his, including the books of the executive officers as well as of the accounting officers.

Q. Prior to that time you had found a great deal of difficulty, had you not, in the management of their accounts, for instance, where they were charged with a large appropriation and had not expended it, and were going on using it from year to year, which resulted in the changes Mr. Dawes made for you in July, 1870?-A. Yes, sir.

Q. The public-debt statement was the one that you have been speaking of-was the one you made the personal examination of?-A. The public-debt accounts were the only ones I made personal examination

of.

By the CHAIRMAN:

Q. Do you know of any reason why the departments' books should not agree with one another as to the amounts of money received and expended? Take the Interior or War or Navy Department; is there any reason why their books should not show the amount of money received from the Treasury Department and the amount returned to it as repayments?-A. No, sir; they ought to agree every time. Taking a series of years the difference would only be the outstanding in the last year, whatever that was. The difference would be the outstanding warrants as between the Treasurer and the Secretary of the Treasury, the outstanding requisitions as between the Secretary of the Treasury and the Secretary of any of the other departments, and the outstanding requisitions as between the Secretary of any of the other departments and his subordinates who had a right to call upon him for money.

Q. There might be the difference of the outstanding warrants?-A. That is all the difference there would be.

THOMAS J. SULLIVAN SWorn and examined.

By the CHAIRMAN:

Question. State what your occupation is.-Answer. I am the accountant of the Bureau of Engraving and Printing of the Treasury Department.

Q. State to the committee, as briefly as you can to have all the facts known, the manner in which you receive paper upon which nationalbank notes are printed, and how you deliver them to the Comptroller of the Currency.-A. The system in operation is about as follows: We receive orders from the Comptroller of the Currency to print first the black impression on the back of the bank notes. When we receive the order, a certified copy of that order is sent to the custodian of the plates and to the custodian of the paper in the Secretary's office, known as the paper clerk. We are not allowed to draw the plates until the custodian of the plates receives this certified copy of the order, nor are we allowed to draw the paper on which they are printed until the custodian of the paper receives his copy. As soon as they receive the copy we make a requisition upon the paper clerk, stating the number of sheets that we require, the number of notes that are to be printed on those sheets, and the denomination of the notes to be printed. On that requisition

15 TREAS

we receive the distinctive paper. It is sent up on the elevator from the rooms in which it is held in the basement of the Treasury Department to our room, in which it is prepared for printing on the upper floor. The superintendent of the division, who prepares it for the printer, has a corps of counters, who count and verify the paper received by him on the requisition which he has made. When he finds it to be correct, he initials the requisition, and sends it to my office for entry. It is then entered in a book known as the "Record of receipts by the Bureau of Engraving and Printing." The clerk who enters it, after she has examined and entered it, places her initials on it, and sends it to my desk. I examine it, and see that the proper entries are made, and send it to the assistant chief of the bureau, who certifies to its entry in the bureau, and the requisition is then returned to the paper clerk, and held as a voucher for the delivery of that paper. The bureau makes a report to the Secretary of the paper received each day, carrying forward the ag gregates from day to-day, so that any day's report will show the aggregate received to and including that day.

By Mr. BECK:

Q. The aggregate for how long?-A. Since the commencement of the series, since the first sheet of paper for it was delivered. Now we have the paper and it remains for us to get the plates necessary to print it. t takes about three days to prepare the paper for the printer. At the end of that time the superintendent of the printing division makes a requisition, stating the plates that he wants, the number of notes on a plate, and the denomination; that goes to the custodian of the plates. If there is an order to our credit on the books, we are given the plates, and they are brought to the printing division and issued to the printer. When he receives his plate he receives also a memorandum of the job on which he is to work; that memorandum he takes to the superintendent of the wetting division-that is the division that prepares the paper; he presents that requisition and is given the number of sheets that he thinks he can print during that day; as soon as he receives the paper he is required to count it and to sign a certificate that he has counted it and that it contains so many sheets of paper for the purpose of printing such a denomination of bank notes; his assistant, who is usually a girl, is required to give a certificate that she saw him count his paper. Those certificates go to the superintendent of the division that is responsible for the paper and are held as vouchers for the delivery to the printer. He is then allowed to go to his press and he proceeds with his printing. There is an automatic register on his press. At the close of the day when he has done his work, he is required to make a memorandum showing the character of the work he has been engaged on, the number of sheets he received in the morning, the number of sheets that he was unable to print and which he returned to the division that he received them from, and the remainder or the number of sheets which he has printed. That memorandum goes with the last package of work that he sends in, and it follows the package to the entry-clerk in the printing division and from there to the entry-clerk in the examining division. By the last entry-clerk the memoranda is taken and compared with her entry to his credit. If it corresponds in every respect she initials it and passes it to another clerk who has charge of a report from the wetting division as the number of sheets which that division delivered to the printers and the number of sheets which they returned, and the number of sheets which they are charged with upon the books of the division. If the number of impressions which

the printer says he printed corresponds with the number of impressions which are charged to him on this report, the last clerk initials it, and it goes back to the superintendent of the printing division.

By this time the man has washed himself up, and is ready to go out, and he presents himself to the superintendent of his division and gets this memorandum, which is considered to be a pass. He presents the memorandum to the watchman at the gate and is allowed to pass out, and of course his account is settled then for the day. He is allowed to go out, because we have a guarantee that his account is balanced; that he has returned to the bureau every sheet that he received. If there should be any discrepancy in his account; if he should have made a mistake in counting in the morning and received one sheet short or one sheet over, as the case might be; if he printed that sheet over it would be indicated on the register. These registers are in charge of a clerk designated for that purpose. He has so many registers under his control. When the men get through he goes to the register, unlocks it, and takes the state of the register. It is the duty of the printer to call to him the number of impressions which he has printed that day. He looks at the register; if the call of the printer agrees with his register he says it is all right; if it does not agree with his register he tells him there is a discrepancy, and the printer then understands that he must go to his superintendent and report that there is a discrepancy. Then, at the close of the day, before the Bureau is dismissed, the entry clerk in the printing division, and the entry clerk in the examining divis ion, where the work is last received and counted and put away, meet the entry clerk in the wetting division, and the register clerk, and they all call the work. As the name is reached on the register list, the clerk in charge of the wetting division book calls the amount that he is charged with, and the others compare and check, and, as each is checked, they say, correct," and so on until the entire list is called. Q. Suppose there is a note blotted or blurred or in some way injured?— A. I have described now the way in which we receive the paper, and the way we pass it to the printer to be printed. On national-bank notes there are three plate printings-the black impression on the back, the green impression on the back, and the black impression on the face. We pass the notes through these several printings in the manner I have described, and when we have finished the notes and are ready to deliver them to the Comptroller of the Currency, we send to him the exact number of impressions which he has ordered, and in most instances it is 500, 600, or 1,000 sheets of four notes each; but whatever the number of the orders, we send him the exact number of perfect sheets. In passing through these various processes there is more or less spoilage, and the Bureau fixes the rate at 5 per cent. In drawing the paper from the Secretary's office we draw 5 per cent. for the purpose of spoilage. So we deliver all the perfect notes to the Comptroller of the Currency, and make a report to the Secretary of a delivery to him from day to day, bringing forward the aggregates so that each report will show the aggregate delivery of any series to and including that day, and we deliver the spoiled impressions to the Secretary's office, the currency branch of the Loan Division, and we also report the mutilated or spoiled delivered in the same way; and the aggregate of the perfect and the spoiled impressions make the aggregate deliveries, and the aggregate deliveries subtracted from the aggregate receipts show on the daily reports the number of sheets which the Bureau is responsible for on any given day. The reports also show the division in which these sheets are located, so that at any time the Secretary desires to verify the reports of the Bureau

he can send his committee there and take these reports and go to this division, count the number of sheets indicated and check it, and so on through the list until he has checked the entire report.

By Mr. DAWES:

Q. You have mentioned the account of the paper from the receipt of it in the Treasury. Can you go back to the manufactory and trace it? Have you knowledge of where the accounting process begins?-A. Yes, sir. Formerly the Bureau had control of the ordering of the paper and they ordered the paper from the manufacturers. The manufacturers, on the order of the Chief of the Bureau, made the paper and turned it over to the agent of the department located at the mills. He had a corps of counters, and counted the paper as it was delivered to him, and gave his receipts for it, and made his reports to the department; and upon the basis of his reports the payments for the paper were made, so that they had a continuous history of the paper from its manufacture until its delivery as perfect money. But I never thought that was correct. I always thought the paper should be outside of the control of the Bureau, and during the last two years it has been so transferred, so that now we order no paper and have no connection whatever with the manufacture of paper.

Q. Do you know how it is that the government protects itself against fraudulent manufacture?-A. At the mills of Wilcox & Co. who made the distinctive fiber paper they had registers similar to the automatic registers on our presses, which recorded the paper as it came off; but I know nothing as to the operation of those registers or how they got along. I think now they have those same registers on the mills at Dalton, where the present paper is made, but I do not know anything about that of my own knowledge.

Q. They have some means by which they protect themselves against any fraud at that point?-A. Yes, sir; these registers if they were properly made and carefully watched would protect the government thoroughly at that point.

By the CHAIRMAN:

Q. You stated in answer to Senator Dawes that formerly the bureau ordered the paper direct from the mill; when was a change made in that respect?-A. I think the last paper ordered by the Bureau was in 1877. Then there was a very large stock of paper on hand and we required no distinctive paper for notes until recently, and all the recent orders have been given for the new paper, and I think sometime last fall the Chief of the Bureau in submitting his estimates for the year 1880, called the attention of the Secretary to the fact that the paper should be ordered by his office and entirely under his control, and he repeated that recommendation in submitting his estimates for the year 1881.

Q. Repeated what recommendation?-A. That the paper should be entirely under the control of the Secretary's office.

Q. That is so now, is it not?-A. It is. It is recognized now by all the officers.

Q. How long have you been in the Printing Bureau?-A. Ten years. Q. During that time up to 1877, the Bureau ordered the paper directly from the mills?-A. Yes, sir.

Q. Did it order at the Chief's direction, such amounts as he chose?— A. Yes, sir; but even at that time the custody of the paper, was not in the Bureau; it was outside. Although they had the control of the ordering of it, yet the custody was just as it is at present.